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PRECIOUS-Gold retreats from 7-year high, but virus fears limit losses

Published 25/02/2020, 08:14 pm
© Reuters. PRECIOUS-Gold retreats from 7-year high, but virus fears limit losses
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(Adds comments and updates prices)

* Silver slips from more than 5-month high

* Asian share markets find some stability

* Coronavirus interactive graphic: https://tmsnrt.rs/2GVwIyw

By K. Sathya Narayanan

Feb 25 (Reuters) - Gold prices fell on Tuesday as investors booked profits after the metal surged to a more than seven-year high in the previous session and as equities regained some footing, but a spike in coronavirus cases outside China capped bullion's losses.

Spot gold XAU= slipped 0.7% to $1,649.70 per ounce by 0847 GMT, having slipped 1.7% at one point earlier in the session. U.S. gold futures GCcv1 fell 1.5% to $1,652.

On Monday, the metal rose as much as 2.8% to $1,688.66, its highest since January 2013.

"People are taking profits. Gold has been severely overbought in the last two weeks because of Covid-19 and expectations for easy monetary policy," CMC Markets analyst Margaret Yang Yan said.

"It's a slight reversion of levels from yesterday but I won't say it's risk-on now, because of the virus. We still have a lot of opportunities ahead in terms of virus impact and after traders take in profits, buyers will come back to the market."

Asian stock markets found some stability after a wave of early selling petered out and Wall Street futures managed a solid bounce. MKTS/GLOB

The coronavirus death toll climbed to seven in Italy on Monday, while several Middle East countries were dealing with their first infections. are increasing concerns that the virus is becoming a global issue now. It would disrupt global supply chains everywhere and potentially put a cap on day-to-day economic activity," said Jeffrey Halley, senior market analyst at OANDA.

The rapid spread of the virus beyond China has heightened fears over its impact on the global economy, driving some bets that the U.S. Federal Reserve will be pressed to cut rates to cushion the hit. central banks react to the global spread by cutting interest rates or through further monetary easing, gold will benefit, ING analyst Warren Patterson said.

While a rising dollar, which has also seen strong interest as a safe haven amid the outbreak, could temper gold's rally, it is unlikely to "hold it back too much," Patterson added. USD/

On the technical front, gold may retest a support at $1,639 per ounce, according to Reuters analyst Wang Tao.

Among other precious metals, palladium XPD= gained 1.7% to $2,673.46 per ounce.

Silver XAG= fell 1.3% to $18.39 an ounce, having touched its highest since early September on Monday, while platinum XPT= inched up 0.2% to $964.99.

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